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real estate practitioners and professionals can also use this reviewer as a
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Fundamentals of Real Estate Brokerage, Fundamentals of Property
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WHATS INSIDE

CHAPTER 1
REAL ESTATE TERMINOLOGY

CHAPTER 2
FUNDAMENTALS OF REAL ESTATE BROKERAGE

CHAPTER 3
FUNDAMENTALS OF PROPERTY OWNERSHIP

CHAPTER 4
FAMILY CODE ON PROPERTY RELATIONS BETWEEN SPOUSES

CHAPTER 5
CONDOMINIUM CONCEPT

CHAPTER 6
BUILDING CODE OF THE PHILIPPINES

11

CHAPTER 7
CONTRACT DOCUMENTATION AND PROPERTY REGISTRATION

15

CHAPTER 8
SALIENT FEATURES OF URBAN LAND REFORM

18

CHAPTER 9
SALIENT FEATURES OF AGRARIAN LAND REFORM

19

CHAPTER 10
LEGAL ASPECT OF SALE, MORTGAGE AND LEASE

20

CHAPTER 11
ASSESSMENT AND TAXATION OF REAL PROPERTY

24

CHAPTER 12
TAX ON REAL ESTATE TRANSACTIONS

28

CHAPTER 13
FUNDAMENTALS OF REAL ESTATE APPRAISAL

31

CHAPTER 14
CODE OF ETHICS AND RESPONSIBILITIES FOR REAL ESTATE
SERVICE PRACTITIONERS

34

CHAPTER 15
ECOLOGY IN REAL ESTATE

38

RESOURCES

Chapter 1: Real Estate Terminology

Acceleration Clause a provision in a promissory note or financing

instrument which renders the remaining principal balance of the loan
immediately due and payable upon default in any stipulated installment.
Air Right right of a landowner to use and control the air space over his
land, subject to the requirements of aerial navigation, law or contract.
Amortization the periodic payment which includes principal and interest.
Buyers Equity the difference between contract price and the amount
which can be loaned.
Earnest Money amount accompanying an offer to purchase to show good
faith or genuine desire of the buyer; it is considered part of the price if the
offer is accepted, but is returnable if the offer is rejected.
Escrow an agreement where the consideration of a contract or a portion
thereof is deposited with a third party known as escrow agent who is
authorized to release payment after fulfillment of some conditions.
Escalation Clause stipulation in a promissory note authorizing periodic
increase of interest rate, or a provision in a longterm lease authorizing
periodic increase of rental.
HoldOver Clause a provision in listing which entitles the broker to the
commission even if he closed the sale after the period of his authority
provided the sale is to a buyer whom the broker registered in writing to the
seller and with whom he has negotiated during the period of his listing.
Listing the authority given by the principal to the broker for the latter to
negotiate the sale, purchase, lease, exchange or mortgage of property
within a stipulated period and at stated price and terms.
Progression, Principle of an appraisal principle which holds that the value
of a property tends to be enhanced by association with superior properties.
Regression, Principle of an appraisal principle which holds that the value of
a property tends to be adversely affected by association with inferior
properties.
Unearned Increment increase in the value of real estate without any effort
or expense by the owner.

Chapter 2: Fundamentals of Real Estate Brokerage

1. Real estate as a business connotes trading in real estate where the

principal invests his own money and/or avails of financing in the
acquisition and/or improvements of real estate for subsequent sale,
lease or other income. Such principal, known as real estate dealer, may
be the ownerdeveloper of a subdivision, condominium, resort and
country club or memorial park project; the ownerlessor of an apartment,
office building or other commercial properties; or engaged in buying
and selling real estate for a profit.
2. Real estate as a practice refers to the rendition of professional service for
or in behalf of a seller/buyer, lessor/lessee, financer/borrower, user or
investor, or other clients in the acquisition, utilization, disposition, and/or
development of real estate. A real estate broker, appraiser or consultant
is engaged in real estate as a practice.
3. Distinctions between real estate broker and dealer:
a) A broker is required to secure a license as such from the
Professional Regulations Commission (PRC)
while a dealer is not required to secure a license
as such from the PRC.
b) A broker is an agent while a dealer is a principal.
c) The income of a broker is referred to as commission or fee,
while the income of a dealer is referred to as
profit or rental.
4. Real estate brokerage is a contract of agency. Agency, in general, is a
contract wherein a person binds himself to render some service or to do
something in representation of or on behalf of another, with the consent
or authority of the latter.
5. Essential Elements of Agency:
a) Mutual consent of parties to establish a relationship
b) Object is the execution of a juridical act
c)Agent acts for the principal and not for himself
d) Agent acts within the scope of his authority
6. Modes of Extinguishing Agency:
a) Expiration of the period
b) Death of the principal or agent
c) Withdrawal of agent
d) Accomplishment of purpose
e) Revocation
f) Dissolution of the firm which granted or accepted the
agency

Chapter 2: Fundamentals of Real Estate Brokerage

Real Estate Brokerage the act or practice whereby a natural or juridical

person, on behalf of a principal and for or in expectation of commission,
fee or other valuable consideration, offers, advertises, solicits, lists,
promotes, mediates, negotiates or effects the meeting of minds on sale,
purchase, lease, exchange, mortgage, joint venture or other transactions
in real estate or any interest therein.
Scope of Real Estate Brokerage
a) Sales Agency engagement to look for a buyer
b) Purchase Agency authority to look for a property
c) Lease Agency procurement of tenants for rental
properties
d) Exchange Agency negotiation for exchange of properties
e) Loan Agency procurement of loan secured by real estate
f) Joint Venture Agency negotiation of development
contract between landowner and developer
General Steps in Brokerage
1. Securing listings
2. Procuring prospects
3. Presentation
4. Demonstration
5. Closing
Listing the authority given by the seller/buyer, lessor/lessee,
financier/borrower or landowner/developer for the broker to negotiate the
sale, purchase, lease, exchange, mortgage, development joint venture of
real estate, for a certain period of time, at a certain price and terms, for a
stipulated rate of commission.
Contents of Listing:
a) Name, address and signature of principal and broker
b) Description of the property: Lot/Block/Plan/ Title Number,
Location, Area, Improvements, Mortgages (if any), Utilities
and Facilities
c) Period of authority
d) Price and terms
e) Rate of commission
Sources of Listing:
a) Personal contacts
b) Referrals
c) Multiple listing and fellow brokers
d) Membership in clubs and associations
e) Foreclosure notices
f) Banks and financing institutions
g) Advertisements

Chapter 2: Fundamentals of Real Estate Brokerage

Factors to Consider in Listing:

a) Price quotation of owner is within the realm of fair market
value.
b) Title is free from any condition or annotation which may
pose legal obstacle to its disposition.
c) Person giving authority is the owner or duly authorized
representatives.
d) Verification whether the property or portion thereof will be
expropriated.
e) Verification, in case of agricultural land, whether disposition
is feasible under agrarian reform law.
Procuring Prospects
A prospect is a person who is in need and can afford to buy. A person who
has the willingness but without capacity or one who has the capacity but
without willingness is only a suspect. One with willingness but without the
capacity but has the willingness to have the capacity is a future prospect.
Sources of Prospects
a) Adjacent or neighboring owners
b) Tenants of the property
c) Previous clients
d) Referrals
e) Fellow brokers
f) Advertisements
g) Club membership
h) Newspaper announcements
i) Apartment dwellers
j) Companies with provident housing benefits for employees
Factors to Consider in Qualifying Prospects
a) Need of the prospect
b) Cash position or capacity to secure financing
c) Verification whether or not prospect is authentic and not
only a window shopper
Presentation an orderly written/oral explanation of facts and figures that
make a given property attractive to a prospective purchaser.
Demonstration the process of showing the property and pointing out its
physical qualities and other advantages and benefits to arouse the desire
to possess or own it.
Negotiation the process of reconciling the opposing views of the parties to
a transaction as to price and terms.

Chapter 2: Fundamentals of Real Estate Brokerage

Closing the process when, thru the mediation of the broker, the minds of
the parties meet where the buyers offer of price, terms and other
conditions become acceptable to the seller or vice versa.
Commission
There is no law prescribing the rate of commission. Rather, it is determined
by agreement between the principal and broker.
Requisites for Commission
a) Broker must be duly authorized by the principal
b) Broker must procure a ready, willing and able buyer
c) Broker must be the procuring cause; that is, he must be
instrumental in effecting a meeting of minds between the
parties
d) Broker must close at the price and terms authorized
Entitlement to the commission accrues upon the consummation, not
perfection of the contract.

Chapter 3: Fundamentals of Property Ownership

Ownership is the independent right of a person to the exclusive enjoyment

and control of a property including its disposition and recovery subject
only to the restrictions established by law and rights of others.
Rights Included in Ownership
1. Right to possess
2. Right to use and enjoy
3. Right to the fruits
4. Right to dispose
5. Right to vindicate or recover
Limitations on Right of Ownership
1. Those imposed in general by the State in the exercise of the
power of taxation, police power and power of eminent
domain.
2. Those imposed by law such as legal easement, requirement
of legitime in succession, zoning, building code, rent control,
urban and agrarian reform, subdivision regulations, escheat.
3. Those imposed by the grantor of the property on the
grantee by contract, such as donation, last will, usufruct.
4.Those imposed by the owner himself, such as voluntary
easement, lease, mortgage.
The term Title is not actually synonymous with Torrens Certificate of Title.
Rather, it is a generic word which means proof, evidence, or document of
ownership, such as tax declaration, realty tax receipts, deed of sale and
Torrens Certificate of Title. But, of course, the best title or best evidence of
ownership is the Torrens Title because it is indefeasible, imprescriptible and
binding against the whole world.
Modes of Acquiring Title
1. Private Grant
2. Public Grant
3. Involuntary Grant
4. Inheritance
5. Reclamation
6. Accretion
7. Prescription

Chapter 3: Fundamentals of Property Ownership

Right to Own
General Rule: Only Filipino citizens and corporations at least sixty percent of
the capital of which is owned by Filipinos are entitled to acquire and own
land in the Philippines.
Exceptions to the General Rule Alien acquisition of real estate in the
Philippines is allowed in the following cases:
a) Acquisition before the 1935 Constitution
b) Acquisition thru hereditary succession if the acquire is a
legal heir
c) Purchase of not more than forty percent interest in a
condominium project
d) Purchase by former natural born Filipino citizens subject to
limitations prescribed by B.P. 185 and R.A. 8179
*A Filipina who marries an alien retains her Philippine citizenship (unless the
law of her husbands country makes her assume the citizenship of her
husband because of such marriage) and can therefore acquire real estate
in the Philippines.
Lands of the Public Domain
Under the Constitution, lands of the public domain are classified into
agricultural, forest or timber, mineral and national parks.

Chapter 4: Family Code On Property Relations Between Spouses

Marital Consent in Sale

1. When the title is in the name of Juan married to Maria or vice versa,
marital consent in the disposition of the property is required in any of the
following cases:
a) When the property regime governing the spouses is
absolute community of property, except when the
property is acquired before the marriage by gratuitous title
(inherited or donated) or acquired before the marriage by
a spouse who is survived by legitimate descendants by a
prior marriage, or
b) When the property regime governing the spouses is
conjugal partnership, except when the property is
acquired during the marriage by gratuitous title or with
exclusive funds or property of the acquiring spouse.
2. Marital consent is not necessary in the disposition of the property in the
following cases:
a) When the property regime governing the spouse is absolute
separation of property; or
b) When the property regime between the spouses is absolute
community of property and the property was acquired by
gratuitous title or acquired before the marriage by a
spouse who is survived by legitimate descendants by a
prior marriage; or
c) When the property regime between the spouses is conjugal
partnership and the property was acquired by gratuitous
title or with exclusive funds or property of the acquiring
spouse.

Chapter 5: Condominium Concept

Distinctions Between Condominium and Traditional Concept of Ownership

1. Evidence of Ownership Ownership in the traditional concept is
evidenced by an original or transfer certificate of title, while
condominium ownership is evidenced by condominium certificate
of title.
2. Capacity to Buy In the traditional concept of ownership, alien
acquisition is not allowed except in cases of hereditary succession
or transfer in favor of former natural born Filipino citizens. In the
condominium concept, alien ownership not to exceed forty
percent interest in the project is legally allowed.
3. Extent of Ownership The interest of an owner in the traditional
concept consists of absolute ownership of the inner and other
structures of the building or house (the entire structure). In the
condominium concept, the unit owner is the absolute owner of
the space within the interior surface of his unit but is only a
coowner of the exterior or faade of the unit.
Condomizing
An owner or developer may convert a property into a condominium
project by executing a legal document called Master Deed and
registering the same with the Register of Deeds.
General Steps in Condomizing
1. Preparation of building plans
2. Execution and registration of master deed
3. Organization of a nonstock, nonprofit condominium corporation
4. Execution of a deed of conveyance transferring land title to the
condominium corporation
5. Submission of building plans to assessors office to obtain individual
tax declarations for the condominium units and common areas
6. Application for registration and license to sell with the HLURB

Chapter 5: Condominium Concept

Rights of Unit Owner

1. Absolute ownership of his unit
2. Coownership of land and common areas
3. Exclusive easement of the space of his unit
4. Nonexclusive easement to common areas for ingress or egress
5. Right to sell, lease or mortgage his unit
6. Right to repair, paint, decorate the interior surface of his unit
7. Right to participate and vote in condominium corporation
meetings
Obligations of Condominium Unit Owner
1. Pay the realty tax on his unit
2. Share the realty tax on the land and common areas
3. Pay the insurance on his unit
4. Share the insurance in the common areas
5. Comply with use restrictions
6. Pay dues and assessments
7. Give other unit owners the priority right to buy his unit (right of first
refusal), if so required by the master deed

10

Chapter 6: Building Code of the Philippines

Republic Act No. 6541: An Act to Ordain and Institute a National Building
Code of the Philippines
SECTION 1
Declaration of Policy
(a) It is hereby declared to be the policy of the State to safeguard life,
health, property, and public welfare, consistent with the principles of
environmental management and control; and to this end, make it the
purpose of this Code to provide for all buildings and structured, a framework
of minimum standards and requirements by guiding, regulating, and
controlling their location, siting, design, quality of materials, construction, use,
occupancy, and maintenance, including their environment, utilities, fixtures,
equipment, and mechanical electrical, and other systems and installations.
Scope
(a) The provisions of this Code shall apply to the design, location, siting,
construction, alteration, repair, conversion, use, occupancy, maintenance,
moving, and demolition of, and addition to, public and private buildings
and structures.
(b) Additions, alterations, repairs, and changes of use or occupancy in all
buildings and structures shall comply with requirements for new buildings and
structures except as otherwise herein provided. Only such portion or portions
of the existing building or structure which have to be altered to effect the
addition, alteration, or repair shall be made to conform to the requirements
for new buildings or structures. Alterations should preserve the aesthetic
value of the building to be altered.
(c) Where, in any specific case, different section of this Code specify
different materials, methods of construction, or other requirements, the most
restrictive shall govern.

11

Chapter 6: Building Code of the Philippines

Application
(a) This Code shall apply to all buildings and structures constructed and any
change or repair made thereon after the approval of said Code. Buildings or
structures constructed before the approval of this Code shall not be
affected thereby; Except, where their continued use or occupancy is
dangerous to life or limb; or where alterations, additions, conversions, or
repairs are to be made thereon, this Code shall apply only to such portions
of the buildings or structure which have to be altered in order to effect such
damages or repairs.
(b) This Code shall apply to chartered cities, poblaciones of municipalities
and municipal districts with a population of at least two thousand (2,000)
inhabitants, and to barrios of urban areas with a population of at least two
thousand (2,000) inhabitants. This Code shall also apply to any area where
there are fifty (50) or more families per hectare.
(c) This Code shall likewise apply to any area proposed for or being
developed into a new town site, residential subdivision, commercial or
residential site, school site, housing project, and similar construction projects
where five or more buildings not covered by paragraph (d) of this Section
will be constructed even if the poblacion or barrio population is less than two
thousand (2,000) or the density of population is less than fifty (50) families per
hectare.
(d) The design and construction requirements of this Code shall not apply to
any traditional indigenous family dwelling costing not more than five
thousand pesos (P5,000.00) and intended for use and occupancy of the
family of the owner only. The traditional type of family dwellings are those
that are constructed of native materials such as bamboo, nipa, logs, or
lumber, wherein the distance between vertical supports or suportales does
not exceed 3.00 meters (10 feet); and if masonry walls or socalos are used,
such shall not be more than 1.00 meter (3 feet, 3 inches) from the ground:
Provided, however, That such traditional indigenous family dwelling will not
constitute a danger to life or limb of its occupants or of the public; will not be
fire hazard or an eyesore to the community; and does not contravene any
fire zoning regulation of the city or municipality in which it is located.
(e) Notwithstanding paragraph (d) of this Section, this Code shall apply to
Group A dwellings produced on a commercial scale and intended for use
by the general public.

12

Chapter 6: Building Code of the Philippines

Dangerous and Ruinous Buildings or Structures

(a) General. The provisions of this Code shall apply to all dangerous
buildings, as herein defined, which are now in existence or which may
hereafter be constructed, as well as to ruinous buildings as defined in Article
482 of the Civil Code of the Philippines.
(b) Dangerous Buildings Defined. Dangerous buildings are those which are
structurally unsafe or not provided with safe egrees, or which constitute a fire
hazard, or are otherwise dangerous to human life, or which in relation to
existing use constitute a hazard to safety or health or public welfare, by
reason of inadequate maintenance, dilapidation, obsolescence, fire hazard,
or abandonment; or which otherwise contribute to the pollution of the site or
the community to an intolerable degree. Any building or structure which has
any or all of the conditions or defects hereinafter described, or conditions or
defects similar thereto, shall be deemed to be dangerous building: Provided,
That such conditions or defect exists to the extent that the life, health,
property, or safety of the public or its occupant are endangered:
Whenever any door, aisle, passageway, stairway, or other means of exist is
not of sufficient width or size, or is not so arranged as to provide safe and
adequate means of exit in case of fire or panic;
(2) Whenever the stress in any materials member or portion thereof, due to
all dead and live loads is more than one and onehalf times the working
stresses or stresses allowed in this Code for new building of similar structure,
purpose, or location: Provided, that in determining working stress, the
working stress method of analysis shall be used, and in the case of
engineering "overstress", the ultimate strength method;
(3) Whenever any portion thereof has been damaged by fire, earthquake,
wind, flood, or by any other cause, to such an extent that the structural
strength or the stability thereof is materially less than it was before such
catastrophe and is less than the minimum requirements of this Code for new
buildings of similar structures, purpose, or location;
(4) Whenever any portion or member or appurtenance thereof is likely to fall,
or to become detached or dislodged, or to collapse and thereby injure
persons or damage property;
(5) Whenever any portion or member or any appurtenance or
ornamentation of the exterior thereof is not of such sufficient strength or
stability, or is not so anchored, attached, or fastened place so as to be
capable of resisting a wind pressure of onehalf of that specified in this Code
for new buildings of similar structure; purpose, or location without exceeding
the working stresses permitted for such buildings;

13

Chapter 6: Building Code of the Philippines

(6) Whenever any portion thereon has wracked, warped, buckled, or settled
to such an extent that walls or other structural portions have materially less
resistance to winds or earthquake than is required in the case similar new
construction;
(7) Whenever the building or structure, or any portion thereof, because of: (i)
dilapidation, deterioration, or delay; (ii) faulty construction; (iii) the removal,
movement, or instability of any portion of the ground necessary for the
purpose of supporting such building; (iv) the deterioration, decay, or
inadequacy of its foundation; or (v) any other cause, is likely to partially or
completely collapse;
(8) Whenever, for any reason, the building or structure, or any portion
thereof, is manifestly unsafe for the purpose for which it is being used;
(9) Whenever the exterior walls or other vertica structural members list, lean,
or buckle to such an extent that the structure falls within the condition
described in the preceding subparagraph (2), above, or whenever any
portion thereof suffers a material reduction of the fire and weather
resistance qualities of characteristics required by this Code for newly
constructed buildings of like area, height, and occupancy in the same
location;
(10) Whenever a building or structure, used or intended to be used for
dwelling purposes, because of inadequate maintenance, dilapidation,
decay, damage, faulty construction or arrangement, inadequate light, air,
or sanitation facilities, or otherwise, is found to be unsanitary, unfit for human
habitation, or in such a condition that is likely to cause sickness or disease;
(11) Whenever any building or structure, because of obsolescence,
dilapidated, condition, deterioration, damage, inadequate exists, lack of
sufficient fireresistive construction, or other cause, is found to be a fire
hazard;
(12) Whenever any portion of a building or structure remains on a site after
demolition or destruction of the building or structure is abandoned for a
period in excess of six months, so as to constitute a nuisance or hazard to the
public;
(13) Whenever any building or structure is in such a condition as to constitute
a public nuisance defined in Article 694 and 695 of the Civil Code of the
Philippines.

14

Chapter 7: Contract Documentation and Property Registration

Documentation writing in appropriate legal form all the information, terms

and conditions of an agreement involving land or an interest therein.
Reasons for Documentation
1. To ensure that the meeting of the minds between or among
contracting parties as to price, terms and other conditions is clear
and explicit.
2. To provide a reminder as to the stipulations agreed upon in case
one or both parties, due to lapse of time, cannot accurately recall
the terms and conditions of the contract.
3. To have the basis for the performance of the stipulated obligations
by heirs who were not privies to the contract in case one or all of
the contacting parties should die.
4. To comply with legal provisions requiring certain contracts to be in
writing.
Essential Elements of Deed of Conveyance
1. Parties to a transaction
2. Description of property
3. Consideration
4. Dispositive clause or words of grant
5. Signature of parties
6. Notarial acknowledgement
Parties to a Transaction
There are at least two parties to a transaction. In sale, they are the
seller and buyer; In lease, the lessor and lessee; In mortgage, the
mortgagor and mortgagee.
Individuals as Parties
The instrument must contain the following data concerning the
parties:
a)
b)
c)
d)
e)

Full Names
Citizenship
Capacity to Contract
Civil Status
Personality in the Contract

15

Chapter 7: Contract Documentation and Property Registration

Juridical Persons as Parties

When a party to a deed is a corporation or partnership, the instrument
must state the following information.
a) That the firm has a legal right to own land in the Philippines in case
ownership is to be transferred to it.
b) The contract is duly authorized by proper resolution of the Board of
Directors in case of corporation, or agreed upon by all or such
authorized partners in case of partnership.
c) The officer duly authorized to represent and sign in behalf of the
firm.
Description of Property
1. Titled Land. The description should include the location,
title/lot/block/plan number, boundaries and area.
2. Untitled Land. The description must include:
a) Nature of the land
b) Boundaries and area
c) Muniments by which the boundaries are visible, such as
monuments, trees (what kind), creek or river, other
landmarks
d) Tax declaration number and assessed value
e) Name/s of person/s in present possession

16

Chapter 7: Contract Documentation and Property Registration

Some Provisions in Contracts

In Sale:
a) Who will pay for the expenses, such as capital gains/withholding
tax, documentary stamps, transfer tax and registration fees
b) Period for delivery of the property
c) Items included in the sale
d) Proration of realty tax, insurance premiums, electric and water bills
e) Escrow provision where the buyer pays a down payment and the
balance is deposited in escrow with a bank in the following cases:
aa) The lot is with squatters and the seller assumes their
ejectment
bb) Title has annotation such as lis pendens which the seller
binds himself to cause the cancellation of
cc) Building has tenants and escrowed money will be released
to the seller after all tenants have vacated the property
dd) Sale involves agricultural land and the seller assumes
responsibility to secure clearance or conversion permit
from the Department of Agrarian Reform
f) In case of installment sale:
aa) Period for payment of balance of price.
bb) Cancellation of contract in case of default in payment.
cc) Forfeiture of all or portion of downpayment in case of
contract cancellation due to default in payment.
dd) Provision that title will only be transferred upon full
payment of purchase price.
In Lease:
a) Period or duration of the lease
b) Rental rate when and where to be paid; whether or not it is net
of withholding tax; escalation clause
c) Deposit requirement
d) Whether or not lessee has right to sublease or assign the leasehold
e) Use and purpose
f) Responsibility for repairs and maintenance
g) Responsibility for association dues; electric, water, telephone and
other utilities
h) Consequences or pretermination of the lease
i) Rights of lessor and lessee with reference to improvements
j) Inspection of premises by lessor
k) Sale of leased premises

17

Chapter 8: Salient Features of Urban Land Reform

Objectives
1. Liberate human communities from blight, congestion and hazard.
2. Promote the optimum use of land as national resource for national
welfare.
3. Provide equitable access and opportunity to the use and
enjoyment of the fruits of the land.
4. Acquire such lands as are necessary to prevent speculative
buying.
5. Maintain and support a vigorous private enterprise system
responsive to community requirements in the use and
development of urban land.
Criteria for Urban Land
1. Cities and municipalities with population density of at least 1,000
persons per square kilometer where at least fifty percent of
economically active population is engaged in nonagricultural
activities.
2. Barangays comprising a former poblacion with a population
density of more than 500 but less than 1,000 persons per square
kilometer where at least fifty percent of the economically active
population are engaged in nonagricultural activities.
Transactions in Urban Land Reform Zones
1. Any sale, lease or mortgage, including the proposed price, rental
or encumbrance requires prior approval of the Housing and Land
Use Regulatory Board.
2. The HLURB shall have the preemptive right to acquire lands in
urban land reform zones.
Tenants Right of First Refusal
Tenants of urban land on which they constructed their residence shall have
the priority right to buy the land if the following requisites are present:
1. They are legitimate tenants;
2. They have occupied the land for at least ten years;
3. The land is within an urban land reform zone; and
4. The landowner is selling the land.

18

Chapter 9: Salient Features of Agrarian Land Reform

Agrarian reform
The redistribution of public and private agricultural lands, regardless of
produce and tenurial arrangement, to landless farmers and regular farm
workers, to include support services and other arrangements alternative to
distribution of land such as production/profit sharing, labor organization or
distribution of shares of stock.
Exemptions and Exclusions
The following are exempt from coverage of the agrarian reform law:
1. Lands actually, directly and exclusively used for prawn farms and
fishponds provided that they have not been distributed and
Certificates of Land Ownership Award (CLOA) issued to agrarian
reform beneficiaries.
2. Lands devoted to the raising of livestock, poultry or swine.
3. Agricultural lands reclassified either as residential, commercial or
industrial thru zoning ordinances approved by the Housing and
Land Use Regulatory Board before June 15, 1988.
4. Agricultural lands with 18% slope or more.
5. Lands actually, directly and exclusively used and found necessary
for parks, wildlife, forest reserves, reforestation, fish sanctuaries and
breeding grounds, watersheds and mangroves.
6. Lands actually, directly and exclusively used and found necessary
for national defense, school sites, church sites, mosque sites,
communal burial grounds, penal colonies and the like.

19

Chapter 10: Legal Aspect of Sale, Mortgage and Lease

Sale
A contract whereby one of the contracting partners (seller) obligates
himself to transfer ownership of and to deliver a determinate thing and the
other party (buyer) to pay therefore a price certain in money or its
equivalent.
Essential Elements of Sale
1. Consent or meeting of the minds
2. Determinate subject matter
3. Price certain in money or its equivalent
Who Can Enter Into Contract of Sale
As a general rule, all persons whether natural or juridical, who can bind or
obligate themselves have legal capacity to buy and sell.
Absolute Incapacity to Sell and Buy
1. The husband and wife cannot sell property to each other except
in the following cases:
a) When separation of property was agreed upon in their
marriage settlement executed before the marriage in a
public instrument, or
b) When the spouses obtained a judicial separation of
property during their marriage.
2. Foreigners cannot buy real estate in the Philippines except in the
following cases:
a) When the purchase refers to a condominium unit not
exceeding forty percent interest in the project.
b) When the foreigner is a former naturalborn Filipino citizen,
subject to the limitations prescribed by Batas Pambansa
185 and R.A. 8179.
3. Unemancipated minors, insane or demented persons and
deafmutes who do not know how to write.

20

Chapter 10: Legal Aspect of Sale, Mortgage and Lease

Relative Incapacity to Buy

The following persons cannot buy, even at public or judicial auction, either in
person or through another:

Public officials and employees with reference to property of the State or

any of its political subdivisions, the administration of which has been
entrusted to them.
Agents with reference to property entrusted to them for administration
or sale, unless the consent of the principal has been given.
Guardians with reference to property under guardianship
Executors and administrators with reference to property under their
administration.
Justices, judges, fiscals and clerks of court with reference to property in
litigation or levied in execution in the court within their jurisdiction.

Obligation of Parties
Seller
a) Transfer ownership of property sold;
b) deliver possession to the buyer;
c) warrant against eviction and hidden defects; and
d) pay expenses for execution and registration of the sale, unless
otherwise stipulated.
Buyer
a) Pay the price; and
b) accept delivery of possession.
Distinction Between a Contract of Sale and Contract to Sell
In a contract of sale, there is already a transfer or ownership. In a contract to
sell, there is no transfer of ownership yet but merely a mutual promise to buy
and sell.
The test to determine whether a contract is a contract of sale or a contract
to sell is not the manner of payment (whether cash or installment) but
whether or not there is conveyance of ownership in the dispositive or grant
clause of the deed. There is transfer of ownership when the dispositive clause
states that the vendor hereby sells, transfers and conveys unto the vendee
in a manner absolute and irrevocable xxx
Real Estate Mortgage
contract by which the debtor guarantees to the creditor the fulfillment of
a principal obligation, subjecting for the faithful compliance therewith, a
real property in case of nonfulfillment of said obligation.

21

Chapter 10: Legal Aspect of Sale, Mortgage and Lease

Points to remember regarding REM:

It is entered into in order to secure the fulfillment of a principal obligation.
In case of the debtors nonpayment of the debt secured by the mortgage,
the only right of the mortgagee is to foreclose the mortgage and have the
encumbered property sold to satisfy the outstanding indebtedness.
As a general rule, the mortgagor retains possession of the property since
mortgage is merely a lien and ownership is not transferred to the
mortgagee.
A simple mortgage does not give the mortgagee a right to the possession
of the property unless the mortgage should contain some special provision
to that effect.
A mere mortgagee has no right to eject the occupants of the property
mortgaged because a mortgage passes no title to the mortgagee.
Pactum Commissorium
a stipulation in a deed of mortgage that upon failure of the mortgagor to
pay the debt, the mortgaged land shall become the property of the
mortgagee or the transaction shall become a sale and the consideration
of the mortgage shall become a sale and the consideration of the
mortgage shall be considered as payment of the price of the land. This
kind of stipulation is null and void because it is against public policy.
The subject matter of Real Estate Mortgage:
1. Immovable properties
2. Alienable real rights in accordance with the laws imposed upon
immovables
Characteristics of REM
Accessorial
A mortgage is merely an accessory contract, it cannot exist without a
valid principal obligation.
Indivisible
The rule is that a mortgage is indivisible, even though the debt may be
divided among the successorsininterest of the debtor or the creditor.
Lease
a consensual, bilateral, onerous and commutative contract by virtue of
which one person binds himself to grant temporarily the use of a thing or
top render some service to another who undertakes to pay some rent,
compensation or price.

22

Chapter 10: Legal Aspect of Sale, Mortgage and Lease

Registration of Contract of Lease

Every lease of real estate may be recorded in the Registry of Property.
Unless a lease is recorded, it shall not be binding upon third persons.
However, when a third person knows of the existence and duration of the
lease, he is bound by such lease even if it has not been recorded.
Obligations of the Lessor
a) To deliver the thing which is the object of the contract in such a
condition as to render it fit for the use intended
b) To make the necessary repairs to keep it suitable for the use to
which it has been devoted, unless there is a stipulation to the
contrary
c) To maintain the lessee in the peaceful and adequate enjoyment
of the lease for the entire duration of the contract
Obligations of the Lessee
a) To pay the price of the lease according to the terms stipulated
b) To use the thing leased as a diligent father of a family, devoting it
to the use stipulated
c) To pay the expenses for the deed of lease
Period of Lease
a) 99 years if lessee is a Filipino citizen
b) 25 years renewable for another 25 years, if Lessee is a foreigner but
not an investor (in accordance with PD 471)
c) 50 years and can be extended to another 25 years if Lessee is a
foreign investor and the leased property is used solely for
investment purpose (RA 7652)
Should the Lease Agreement be in writing?
Lease of real estate may be made orally; however, if the lease period is for
more than one (1) year, it must be in writing.

23

Chapter 11: Assessment and Taxation of Real Property

Principles for Appraisal and Assessment of Real Property

1. Real property shall be appraised at its current and fair market value;
2. Real property shall be classified for assessment purposes on the basis of its
actual use;
3. Real property shall be assessed on the basis of a uniform classification
within each local government unit;
4. The appraisal, assessment, levy and collection of real property tax shall
not be let to any private person;
5. The appraisal and assessment of real property shall be equitable.
Assessed Value the Fair Market Value of the real property multiplied by the
assessment level. It is somewhat synonymous to taxable value.
The Assessed Value of a real property is determined by the formula:
AV = MV x AL

where: AV = ASSESSED VALUE

MV = MARKET VALUE
AL = ASSESSMENT LEVEL

Declaration of Real Estate for Assessment

1. By Owner required to file sworn declaration of ownership and value of
property once every three years during the period January to June.
2. By Transferees required to file a sworn declaration of ownership and
value within sixty days from acquisition.
Documentary Requirements for Transfer of Tax Declaration
1. Copy of Deed of Conveyance
2. Copy of new title in the name of transferee
3. Copy of BIR Clearance
4. Copy of Capital Gains Tax or Withholding Tax and Documentary Stamp
Receipts
5. Copy of Transfer Tax Receipt
6. Copy of Real Estate Tax Clearance

24

Chapter 11: Assessment and Taxation of Real Property

Documents for New Improvement

1. Copy of building permit
2. Copy of building plans
3. Certificate of Completion by architect or builder
4. Occupancy Permit by building official
Date of Effectivity of Assessment or Reassessment
1. All assessments or reassessments made after the first day of January of
any year shall take effect on the first day of January of the succeeding
year.
2. Reassessment of real property due to its partial or total destruction, or to a
major change in its actual use, or to any great and sudden inflation or
deflation of property values shall be made within 90 days from the date
any such cause occurred and shall take effect the beginning of the
quarter next following the reassessment.
Appeals from Assessment
1. Valuation of assessor may be appealed with the Local Board of
Assessment Appeals within sixty days from receipt of notice of assessment.
The Board is composed of the City or Provincial Register of Deeds as
chairman and City or Provincial Prosecutor and Engineer as members.
2. Decision of the Local Board of Assessment Appeals may be appealed
with the Central Board of Assessment Appeals within thirty days from
receipt of the decision.
Assessment Level
The assessment level to be applied to the Fair Market Value of real property
to determine its assessed value shall be fixed by ordinances of the
Sangguniang Panlalawigan, Sangguniang Panglungsod or Sangguniang
Pambayan of a municipality within the Metropolitan Manila Area at the
rates not exceeding the following:

25

Chapter 11: Assessment and Taxation of Real Property

On Land:
CLASS
ASSESSMENT LEVEL
Residential
20%
Agricultural
40%
Commercial
50%
Industrial
50%
Mineral
50%
Timberland
20%
Rate of Property Tax
Tax rates are to be set forth by a local ordinance with maximum rates as
follows:
For Provinces not exceeding one (1%) percent of the assessed value of the
property. For Cities and Municipalities within Metro Manila not exceeding
two (2%) percent of the assessed value of the property.
Special Education Fund (SEF)
In addition to the basic real property tax, the LGUs may levy and collect an
annual tax of one (1%) percent which shall accrue exclusively to the
Special Education Fund (SEF).
Additional Ad Valorem Tax on Idle Lands
In addition to the basic real property tax, LGUs may impose an annual tax
on idle lands at the rate of not exceeding five (5%) percent of the assessed
value of the property.
Taxpayers Remedies Against Special Levy
Any owner of real property affected by a special levy or any person having
a legal interest therein may, within sixty (60) days from the date of receipt
of the written notice of assessment of the special levy may protest such
assessment and the decision on the protest may be appealed to the Local
Board of Assessment Appeals (LBAA) and further, if necessary, to the
Central Board of Assessment Appeals (CBAA).

26

Chapter 11: Assessment and Taxation of Real Property

Collection of Real Property Tax

The real property tax for any year shall accrue on the first day of January
and from that date it shall constitute a lien on the property which shall be
superior to any other lien, mortgage, or encumbrance of any kind
whatever and shall be extinguished only upon the payment of the
delinquent tax. The tax may be paid in four (4) quarterly installments which
shall be paid on or before the last day of the quarter.
Tax Discount for Advanced and Prompt Payment
If the basic real property tax and the additional tax accruing to special
education fund are paid on time or in advance in accordance with the
prescribed schedule of payment as provided in Article 341 of this Rule, the
Sangguniang concerned may grant a discount not exceeding twenty
percent (20%) of the annual tax due.
For the purpose of this Rule, prompt payments may be given a discount of
ten percent (10%), while advanced payments may be entitled to the
maximum discount of twenty percent (20%).

27

Chapter 12: Tax on Real Estate Transactions

In buying real properties, all taxes to be paid that are necessary for the
transfer of title shall be shouldered by whoever was designated and agreed
in the deed of sale.
However, if the deed of sale is silent as to who will shoulder what taxes and
expenses, all taxes and expenses necessary to effect the transfer of title shall
be shouldered by the seller.
If in buying a real property, a provision in the deed of sale provides that the
buyer shall shoulder all or any particular taxes, the buyer should be aware
beforehand of what taxes would be needed to pay and how it would be
computed.
Classification of Assets
1. Capital assets shall refer to all real properties held by a taxpayer, whether
or not connected with his trade or business and which are not included
among the real properties considered as ordinary assets under Section 39
(A) (1) of the Revenue Code.
2. Ordinary assets shall refer to all real properties specifically excluded from
the definition of capital asset, namely:
a) Stock in trade of a taxpayer or other real property of a kind which
would properly be included in the inventory of the taxpayer if on
hand at the close of the taxable year; or
b) Real property held by the taxpayer primarily for sale to customers
in the ordinary course of trade or business; or
c) Real property used in trade or business of the taxpayer.
Note: Real properties acquired by banks through foreclosure sales or dacion
en pago are considered as their ordinary assets.
Capital Gains Tax tax imposed on the gains presumed to have been
realized by the seller from the sale, exchange or other disposition of real
property located in the Philippines, classified as capital assets, including
pacto de retro sales and other forms of conditional sale.

28

Chapter 12: Tax on Real Estate Transactions

Transactions Subject to Capital Gains Tax Sales, exchanges, dacion en

pago (conveyance of property), pacto de reto sales and other dispositions
of real estate located in the Philippines and classified as capital asset, by
individual citizen, domestic corporation, individual resident alien and
nonresident alien engaged in trade or business in the Philippines.
Venue and Date of Payment of Capital Gains Tax
a) Where paid with authorized agent bank (AAB) located within the
Revenue District Office (RDO) having jurisdiction over the place where
the property being transferred is located.
b) When payable within thirty (30) days from notarization of the deed of
conveyance. Payment after the said date shall be subject to twenty five
percent penalty.
Rate and Basis Tax of Capital Gains Tax
The rate of capital gains tax is six percent computed on the following basis:
a) Sale and Lot only Basis is whichever is higher between price per deed of
sale or lot zonal value.
b) Sale of Lot with Improvement Basis is whichever is higher between the
price per deed of sale, on one hand and lot zonal value plus
improvement value, on the other hand.
c) Sale of Condominium Unit Basis is whichever is higher between the price
per deed of sale or condominium unit zonal value.
d) Sale of agricultural land without zonal value Basis is whichever is higher
between price per deed of sale or adjusted BIR value. Adjusted BIR value
is market value per tax declaration plus 150%.
Conditions for Exemption from Capital Gains Tax
a) The seller is a natural person and the capital asset sold is his principal
residence (family home).
b) The BIR is duly notified by the taxpayer within thirty days from the date of
sale through a prescribed return of his intention to avail of the tax
exemption.
c) The proceeds of the sale will be used to acquire or construct a new family
home within eighteen months.
d) The tax exemption can only be availed of once every ten years.
e) If there is no full utilization of the proceeds of the sale, the portion of the
gain presumed to have been realized from the sale shall be subject to
capital gains tax.

29

Chapter 12: Tax on Real Estate Transactions

Withholding Tax
Transactions Subject to Withholding Tax Sale, exchange or transfer of
ordinary asset by individual citizens, domestic corporation, estate or trust.
NOTE: In the case of resident foreign corporations being the seller, their sale
of real property located in the Philippines, regardless of classification shall
be subject to creditable withholding tax
In the case of nonresident foreign corporations being the seller, their sale of
real property located in the Philippines shall be subject to the final
withholding tax of thirtytwo percent.
Documentary Stamp Tax a tax on documents, instruments loan agreements
and papers evidencing the acceptance, assignment sale or transfer of an
obligation, rights or property incident thereto.
Transfer Tax tax payable to the local government (City or Provincial
Treasurer) for the sale or other disposition of real estate, regardless of
classification of the property.
a) The rate is not more than one percent for properties located in the
cities (wherever located) and municipalities in Metro Manila and
not more than onehalf percent for properties located in the
provinces.
b) Basis is the contract price or market value per tax declaration
whichever is higher. However, the local government may enact an
ordinance prescribing as basis the contract price or zonal value,
whichever is higher.
EVAT Relating to Real Estate
Expanded Value Added Tax is an indirect tax. It can be passed on to the
buyer. However, it should be inputted or builtin the price. The sales contract
cannot stipulate that the EVAT shall be for the account of the buyer.

30

Chapter 13: Fundamentals of Real Estate Appraisal

Real Estate and Real Property

Real estate refers to the physical land and appurtenances, including
structures permanently attached thereto.
Real property refers to the interests, benefits and rights inherent in the
ownership of real state. It is the bundle of rights with which the owner of
real estate is endowed.
Purpose of Appraisal
1. In connection with purchase and sale
2. In connection with financing and credit
3. In connection with corporate affairs
4. In connection with partition of estate
5. In connection with eminent domain
Factors Affecting Accuracy of Appraisal
1. Competence of the appraiser
2. Integrity of the appraiser
3. Soundness of the procedure used in the appraisal
4. Availability of the pertinent data
Value
1. As per US Society of Residential Appraisers
Value is the present worth of future benefits to a typical buyer.
2. As per American Inst. of Real Estate Appraisers
Value (actual cash) is the price the property will bring in a fair market,
after a fair and reasonable effort has been made to find a purchaser
who will give the highest price.
Generally, however, value refers to what a willing buyer, not forced to buy,
will pay and what a willing seller, not forced to sell, will accept, after
exposing the subject property in a free and an open market within a
reasonable period of time.
Market Value the highest price in terms of money which a property will
bring in a competitive and open market under all conditions requisite to a
fair sale, the buyer and seller each acting prudently, knowledgeably and
assuming the price is not affected by undue stimulus.
Other Values Derived by Appraisal
1. Insurable value to serve the need of insured, insurer and adjuster.
2. Going concern value to serve for corporate mergers the issuance of
stock, revision of book figures and so forth.
3. Liquidation value or price for forced sale or auction proceedings.
4. Assessed value to establish a uniform schedule for property and ad
valorem taxation.
5. Condemnation value for eminent domain cases.

31

Chapter 13: Fundamentals of Real Estate Appraisal

Cost and Price

Price is the amount of money paid for a certain property regardless of
market value.
Cost is the amount of money expended to develop or to acquire a certain
property. (Price plus expenses such as transfer taxes and notarial)
Guiding Principles in valuation
1. Principle of Anticipation
2. Principle of Substitution
3. Principle of Change
4. Principle of Contribution
5. Principle of Diminishing and Increasing Returns
6. Principle of Highest and Best Use
7. Principle of Balance
8. Principle of Conformity, Progression and Regression
9. Principle of Competition
10. Principle of Supply and Demand
11. Principle of Externalities
Factors That Influence Real Estate Value
1. Location, shape, topography, depreciation, climate condition, soil depth
& fertility, size, etc.
2. Economic factors such as purchasing power, population density, business
& trade opportunities, inflation or deflation etc.
3. Political and Governmental Factors such as monetary and credit policies,
taxes and licenses, zoning and building regulations, rent control etc.

32

Chapter 13: Fundamentals of Real Estate Appraisal

The Three Basic Approaches to Valuation

Appraisers commonly think of value in three ways:
1. Cost Approach The current cost of reproducing a property less
depreciation from all source that is, deterioration, functional and
economic obsolescence.
2. Income Approach The value which the propertys net earning power
will support based upon a capitalization of net income.
3. Market Data Approach The value indicated by recent sales of
comparable properties in the market.
The Appraiser utilizes all three approaches in most of his or her appraisal
works. He may believe that the value indicated by one approach will be
more significant than that of the other two, yet he will use all three as a
check against each other and to test his own judgment. However, there are
appraisal problems in which they cannot be applied such as in a vacant
land, the use of the cost approach, or in the case of an owner occupied
home, the use of income approach. All three approaches are needed in the
solution of most appraisal problems.
Three Kinds of Depreciation
1. Deterioration or the physical wearing out of the property.
2. Functional obsolescence or lack of desirability in terms of lay out, style
and design as compared with that of a new property serving the same
function.
3. Economic obsolescence relating to loss of value from causes outside the
property itself.

33

Chapter 14: Codes of Ethics and Responsibilities for

Real Estate Service Practitioner

Article II Section 2. The Real Estate Service Practitioners shall perform it duties
and responsibilities with utmost integrity, responsibility, fidelity, sincerity,
respect and courtesy for colleagues in the profession with a behavior proper
to a professional.
The Real Estate Service Practitioners shall adhere to the strict compliance of
the National Code of Ethics and Responsibilities with honesty, good moral
conduct and strong sense of values. The practitioner shall observe at all
times objective moral standards in the practice of real estate service with
good governance in relation with his/her client(s) and the community and in
service to the nation and Filipino people.
Article III Professional Rules of Conduct and Responsibilities
The Practitioners shall be governed by the following professional rules of
conduct and responsibilities.
Section 1. To the Government
(a) The Practitioner shall secure all the necessary licenses, permits and
authority from the Commission and other government agencies as may be
required by law, ordinance or rules and regulations and comply with all the
requirements relative to the practice of real estate service.
(b) The Practitioner shall pay any and all professional fees and taxes that are
required by law in the practice of real estate.
(c) The Practitioner shall not encourage, tolerate or participate in the
evasion or illegal reduction in the payment of all taxes, fees or charges that
is due to the government.
Section 2. To the Public
(a)The Practitioner shall be imbued with a social responsibility and
conscience being part of society with duties and responsibilities for the
promotion of the common good.
(b) The Practitioner shall cooperate with the government in protecting the
public against deceit, misrepresentation, unfair, relevant information and
other related unethical and immoral practices and malpractices of
unlicensed and unauthorized real estate service practitioners.
(c) The Practitioner shall endeavor to present the full disclosure of pertinent
and material facts on the subject property in advertisements (i.e. brochures,
flyers and press releases (whether in trimedia or electronic media/means).

34

Chapter 14: Codes of Ethics and Responsibilities for

Real Estate Service Practitioner

Section 3. To the Clients

(a)The Practitioner in accepting any authority, listing and/or assignment to
act for and in behalf of a client shall be obliged with prudence, integrity,
loyalty, fidelity and good faith in protecting and promoting the interest of
the client without sacrificing the legitimate interest of the other party in the
transaction which shall not be contrary to the law, good morals and public
interest.
(b) The Practitioner shall not accept any professional fee or valuable
consideration from any party of the real estate transactions except from
his/her client unless with the full knowledge and consent of all the parties.
(c) The Practitioner shall charge or collect standard professional fees which
are fair and reasonable in accordance with real estate industry practice in
similar transactions but not lower than the agreed minimum professional fee
as recommended by the accredited and integrated professional
organization based on the existing standards of real estate service practice.
Section 4. To Fellow Practitioners
(a)The Practitioner shall not use any vital documents relative the professional
conduct without written consent by the other Practitioner.
(b) The Practitioner may coordinate with other Fellow Practitioners and
agree their respective reasonable professional fees in accordance with the
Tariff of Professional Fees prescribe by the Accredited and Integrated
Professional Organization (APO).
(c) The Practitioner shall not use or solicit the services of the employee of
another Practitioner without the written consent by the latter.
(d) The Practitioner shall not engage in slander, oral defamation, gossip, or
criticize publicly a fellow practitioner and/or competitor nor volunteer a
negative and damaging opinions of a competitor and/or fellow practitioner
in any means (SMS, electronics mails or letters, etc of similar nature). And if
ones opinion is essentially sought for common good, the Practitioner shall
render it with prudence, truth with professional integrity, courtesy and
respect to a fellow practitioner cautious in safeguarding the latters human
rights and good reputation and credibility.

35

Chapter 14: Codes of Ethics and Responsibilities for

Real Estate Service Practitioner

(e) The practitioner shall not seek unjust and unfair advantage over his/her
fellow practitioners by organizing or sowing discord, spreading and bad
mouthing against other practitioners particularly officers and members of
their association or APO or even other associations.
(f) The Practitioner shall willingly share, contribute, write and publish articles
for the benefit of fellow practitioners and for the good of the real estate
industry by imparting knowledge, technical training, experiences, studies or
research without prejudice to classified or confidential information from
client.
(g) The Practitioner shall conduct ethical and professional practice with
honor, dignity and integrity to avoid any controversies with fellow
practitioners.

36

Chapter 14: Codes of Ethics and Responsibilities for

Real Estate Service Practitioner

Article IV Specific Duties and Responsibilities

Section 1. Real Estate Brokers shall:
(a)Make sure that all agreements, terms and conditions, financial obligations
and commitments in real estate transactions are in writing, duly signed by all
the parties concerned.
(b) Not advertise any property listings and/or inventories without written
authority from the Client and shall endeavor to offer the same at the
authorized amount granted by the client.
(c) Present all written offers/proposals or counteroffers/proposals to the
Client for sound judgement or decision and shall endeavor to make the
client conclude to a fair and reasonable contract advantageous to all the
parties concern to the transaction and likewise, assist the client or the other
party acquire possession and ownership of the property subject to the
transaction in accordance with the agreed terms and conditions of the
parties.
(d) Not secure listings/inventories currently exclusively listed with another
licensed Real Estate Broker unless said exclusive listing agreement had
expired/revoked by the client and the latter offers it to the new licensed
Real Estate Broker who did not solicit it or use any unethical means to
acquire the said listing agreement.
(e) In accepting listings/inventories from the Listing Broker, respect the listing
agreement of the latter until the expiration thereof.
(f) Not transmit to any Third licensed Real Estate Broker vital information
about the property listings/inventories via electronic mails, SMS or published it
any form of announcements/advertisements without the written consent of
the Listing Broker.
(g) Not accept any listings/inventories from the Client or any third party
which inventories has been previously listed to a licensed Real Estate Broker
without conducting inquiries and discussion on the reason for the transfer of
professional engagement.
(h) Not put signages or notices on a property for sale, rent or lease it not
authorized in writing by the client and shall not be placed on any property
by more than one licensed Real Estate Broker.

37

Chapter 15: Ecology in Real Estate

Ecology study of the relations that living organisms have with respect to
each other and their natural environment. Variables of interest to ecologists
include the composition, distribution, amount (biomass), number and
changing states of organisms within and among ecosystems.
The three basic ways organisms get food are as producers, consumers and
decomposers.
1. Producers (autotrophs) are typically plants or algae. Plants and algae do
not usually eat other organisms but pull nutrients from the soil or the
ocean and manufacture their own food using photosynthesis. For this
reason, they are called primary producers. In this way, it is energy from
the sun that usually powers the base of the food chain. An exception
occurs in deepsea hydrothermal ecosystems, where there is no sunlight.
Here primary producers manufacture food through a process called
chemosynthesis.
2. Consumers (heterotrophs) are animals which cannot manufacture their
own food and need to consume other organisms. Animal that eat
primary producers (like plants) are called herbivores. Animals that eat
other animals are called carnivores and animals that eat both plant and
other animals are called omnivores.
3. Decomposers (detritivores) break down dead plant and animal material
and wastes and release it again as energy and nutrients into the
ecosystem for recycling. Decomposers, such as bacteria and fungi
(mushrooms), feed on waste and dead matter, converting it into
inorganic chemicals that can be recycled as mineral nutrients for plants
to use again.
Keystone Species
species that is disproportionately connected to more species in the
foodweb. Keystone species have lower levels of biomass in the trophic
pyramid relative to the importance of their role. The many connections
that a keystone species holds signify that it maintains the organization and
structure of entire communities. The loss of a keystone species results in a
range of dramatic cascading effects that alters trophic dynamics, other
foodweb connections and can cause the extinction of other species in the
community.
DENR Administrative Order No. 9637 Series of 1996
Subject:
Revising DENR Administrative Order No. 21, Series of 1992, to Further
Strengthen the Implementation of the Environmental Impact Statement
(EIS) System
Basic Policy:
To attain and maintain an orderly balance between socioeconomic
growth and environmental protection through the sustainable use,
development, management, renewal and conservation of the countrys
natural resources.

38

Chapter 15: Ecology in Real Estate

Objectives
1. Ensure that environmental considerations are incorporated at the earliest
possible stage of project development.
2. Further streamline the current procedures in the conduct of the
Environmental Impact Assessment (EIA) in order to improve its
effectiveness as a planning, regulatory and management tool.
3. Enhance maximum public participation in the EIA process to validate the
social acceptability of the project or undertaking so as to ensure the
fullest consideration of the environmental impact of such project or
undertaking.
Definition of Terms
Environmental Compliance Certificate (ECC)
The document issued by the DENR Secretary or the Regional Executive
Director certifying that based on the representations of the proponent
and the preparers, as reposed project or undertaking will not cause a
significant negative environmental impact; that the proponent has
complied with all the requirements of the EIS System, and that the
proponent is committed to implement its approved Environmental
Management Plan in the Environmental Impact Statement or mitigation
measures in the Initial Environmental Examination.
Environmentally Critical Area (ECA)
an area that is environmentally sensitive.
Environmentally Critical Project (ECP) a project that has high potential for
significant negative environmental impact.
Environmental Impacts the probable effects or consequences of proposed
projects or undertakings on the physical, biological and socioeconomic
environment that can be direct or indirect, cumulative and positive or
negative.
Environmental Impact Assessment (EIA) the process of predicting the likely
environmental consequences of implementing projects or undertakings
and designing appropriate, preventive, mitigating and enhancement
measures.

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REFERENCES

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